From a Facebook Friend in response to this photo: Why is it that In n Out Burger can pay their employees $11 something an hour, provide benefits, have friendly efficient staff, use real beef, and their meals cost less than McDonalds?
Good question…. I spent 25+ years in the food service industry and there are many factors that contribute to this. First and foremost In-N-Out Burger is not publicly owned so it doesn’t have to answer to stock holders. They have extremely rigid standards for their franchisees which is why up until about 20 years ago they only existed in Southern California. Their biggest advantage is in the pricing wars on raw products such as the REAL beef they use and the REAL potatoes… they have locked in vendor relations for over 65 years. These vendors are loyal because if it weren’t for In n Out they most likely would have never had some of the opportunities they have enjoyed. We see this same kind of vendor loyalty with brands like Jason’s Deli. Other factors include internal distribution centers rather than outsourcing in individual markets with the exception of fresh produce. In n Out rarely hires full time employees, the only employees that are considered full time are their managers. Although there may be those getting 37+ hours a week they are still only classified as part time. This type of staffing standard is common in the food service industry primarily because it reduces the incidence of paying unnecessary overtime rates. As for benefits they may or may not be offering currently, it may be a choice they made in an effort to recruit those higher caliber friendly staff members we enjoy when we visit an In n Out Burger. The benefits may all but cease with this national healthcare debacle any way. All that being said there is no way as a veteran in this industry that I could ever justify giving a counter worker $15 per hour. If I am paying you that much you better be able to make a decision that is going to make my customer happy and make them leave wanting to return and you better make sure the order is right. At $15 per hour I better be able to leave you in charge for a shift and be confident that the money will be in the safe in the morning and that you won’t burn down my restaurant.
For those of you not familiar with the P&L of a food service establishment it breaks down something like this…. estimated Combined Labor Cost 22%, Avg Food Cost 29%, Paper Cost 3.5%, Taxes & Insurance 22%, Occupancy costs 12%, Operating Costs 4.5%, Marketing costs 2% leaving only about a 5% profit margin for an efficiently run operation.
Now that you have the math you can calculate the equation yourself and see why paying food service workers a $15 minimum wage would effectively destroy the industry. The consequences would have a domino effect. Raise the wage rate means raise the prices, reduce the number of staff to serve you, reduced quality, poor service and in the end you don’t return, then all of those people that were screaming for $15 an hour are on the unemployment line. Simple as that…..